Kellogg World Alumni Magazine, Winter 2001Kellogg School of Management
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The spirit of Kellogg: research and teaching

Associate Dean David Besanko

Associate Dean Robert Magee

Associate Dean David Besanko  
Associate Dean David Besanko  
Associate Dean Robert Magee  
Associate Dean Robert Magee  
The following is an edited transcript of a Kellogg World interview with Associate Deans for Academic Affairs Besanko and Magee in which they discussed aspects of the Kellogg School's research and teaching agendas. More details about Dean David Besanko and Dean Robert Magee's professional endeavors may be found on their vita pages.

Kellogg World: From an institutional perspective, what are some of the ways that Kellogg has built its academic strengths over the years.

Dean Robert Magee: One of the things that's been part of Kellogg for as long as I have been here, which is 25 years, has been a dedication to research. It is, for faculty, if not their first responsibility, a responsibility that is equal to their classroom responsibilities. Research is something our faculty and administration focuses on and talks about every day, every week. Our departments have frequent research seminars where outside speakers present what they're working on. Research is something that gets a lot of attention among our faculty. We're going to continue to give academics at Kellogg more attention and a broader audience.

Dean David Besanko: The preeminence of research is put first and foremost here, and it's a differentiating feature of Kellogg. When the Allen Center opened in the late-1970s, Dean Donald Jacobs strategically positioned the school's executive education program by saying that these courses were a place where our faculty could go and test ideas that they had developed in their research, forge those ideas through interaction with very bright - in some cases skeptical - executives, and then bring those ideas back into the Kellogg full-time and part-time classroom. So research was a very important part of the mixture when Kellogg's executive education strategy was formed, at least at the Allen Center. Of course we had executive education before that.

In addition, Kellogg has always encouraged a very collaborative research environment that is consistent with other parts of the Kellogg culture. This school is a place in which co-authored work from faculty members at Kellogg or with other faculty from other schools has always been very highly valued. The tangible way in which we value this work is shown in our personnel process. We don't divide by two or three when faculty members have co-authored work with two or three other authors. In some schools, if a faculty member had a co-authored piece of publication, the impact of that work gets adjusted to reflect the number of authors. So you receive half-credit if you share publication with another scholar, etc. That's never been the case at Kellogg. Co-authored work is considered to be the same as single-authored work in the eyes of the Personnel Committee which evaluates research for the purpose of making decision about tenure and promotion.

Dean Magee: This policy arrangement is a critical part of the faculty research culture because it means that faculty are eager to work together and to embrace new professors who come into the school.

The more one considers that point, the more important is becomes, because the policy encourages cross-pollination of ideas and a general dynamic interplay among faculty and departments.

Dean Magee: Our presumption is that this arrangement creates better research in almost all cases. We end up with better intellectual output, better trained doctoral students, more successful junior and senior faculty. Kellogg becomes a more interesting place.

Dean Besanko: This research climate really mirrors the teamwork environment that exists at other levels in the school with respect to our full- and part-time students, and with respect to our executive program - also in the way the school has been historically governed. With research, too, we see another tangible sign of the collaboration and support that has been so characteristic of Kellogg over the years.

It seems that Kellogg's collaborative environment would serve as a powerful recruiting tool for faculty. Talk about some of the challenges associated with recruiting and retaining good faculty in competition with other peer schools.

Dean Magee: It's always been difficult to recruit faculty, because you are always trying to hire the very best. What happens in thick years and in thin, is that we go through our search process, we interview people at meetings, we send out announcements, we make phone calls and receive applications. Our objective is to find whom we believe are the top six or eight people in the market that year, then schedule them for interviews. Of course, at the same time Stanford, MIT, Harvard and Chicago are all looking at exactly the same set of candidates. You always end up in competition with some very good schools. So I don't know that it gets materially harder from one year to another to recruit good faculty. It is always a challenge. For most junior faculty coming out of a doctoral program, their principle concern is finding a place where their career can be launched best.

They're going to be looking for a place where the temperament, research support and quality of colleagues are in accord with their own predilections.

Dean Magee: That's exactly right. We have tried to find faculty in those areas at Kellogg where the research fits best with the school, with our research and with the student interest. For instance, we don't have many students who want to know about auditing or who want to pursue careers in auditing, so we haven't hired faculty whose principle interests are in auditing. In each of these areas, there are certain strengths that Kellogg has, and one of the effects of those strengths is that we're more attractive to prospective faculty who want to work in those areas. We have the ability to collaborate and do joint research, we have people who read your research and make good comments on it. We know that faculty need time, resources and good colleagues to be successful in their research.

That brings up an interesting point: how do we build new strengths in the curriculum from an organizational standpoint?

Dean Besanko: Certainly we are a school with more than one strong department. We believe we're a school with six strong departments. Over the years those strengths have waxed and waned. Some departments have gone through periods where we've had to make a concerted effort to build them. Frankly, 10 years ago my department - strategy - was probably not one of Kellogg's strengths. But it's a very important area both from the teaching and curriculum perspective, and from an intellectual research perspective. So the school put resources into hiring faculty at the senior and junior levels, and we developed that area. With a group of dedicated, hard-working faculty members, we have been able to develop a very nice international reputation in strategy. Strategy can be approached from a number of different perspectives: behavioral, economic, etc. What we've done with this department is develop it using an approach that focused on economics. To really build up an academic area, a school needs to develop a critical mass in terms of faculty and research resources. Now we have that.

You try to build on your strengths to gain critical mass, but you also build research areas because of their intrinsic importance. These are not mutually exclusive strategies. It just depends on where a department is in its life cycle. We're talking about departments here that have 20-25 faculty members, so the loss of a few key faculty can change the character of a department. That's why departments will sometimes go through periods where it becomes necessary to build from the ground up, whereas other departments, like finance or strategy today, enjoy existing strengths we can build on.

Dean Magee: One of our competitors made a joint offer to three of our faculty in MORS last year. We were successful in keeping them here, but having three key faculty members depart in a faculty of this size would create a huge hole to fill. In addition, we ought to give credit to the people who were here around 1970, including then-Dean John Barr, because the school then went in the direction of concentrating on research-active, quantitative economics faculty: Stan Reiter, Mort Kamien, Nancy Schwartz, David Baren, Mark Satterthwaite, John Roberts and others. These were people doing quantitative, game-theory-based research in economics and in contracting, and they became a magnet for others. That's what attracted me here in 1976, and what attracted many of the stalwarts of the finance department. There began to be a focus on information and quantitative economic analysis that has had a lasting impact, especially for managerial economics and for MEDS and the finance department and management and strategy and accounting.

For MORS it was probably the growth of dispute resolution research that has significantly formed them. It's a measure that's had a big impact on them. Marketing has been a force on its own for a long time. For the other four departments, though, it was those choices made back in the late 1960s and early 1970s that put the school on a course. So often there are factors at work that are invisible to the outside world, and maybe even inside the school too, that push us on an intellectual course that has had a lasting impact on the school.

It's easy to overlook some of the foundations and just adopt an attitude that focuses on more recent times and developments.

Dean Magee: There was a time in the late-1970s or early-1980s where you could say that Kellogg had the best economics department in the country. They're very good now, but at the time that department was a magnet for many of the people who are here today.

It sounds like the nature of how higher education works today is that Kellogg could work to tip a very good department into an outstanding department with the strategic acquisition of a couple key faculty members. It's interesting how departmental status can change so quickly.

Dean Magee: We have some of those irons in the fire even as we speak.
Dean Besanko: I think it's fair to say that the faculty hiring strategy here has been more of a growing our own faculty as opposed to raiding other schools. You'll find at Kellogg a mix of people who have come from other schools. I came from Indiana-

Dean Magee: I came from the University of Chicago.

Dean Besanko: But the general thrust of the strategy here has been pretty continuous: to hire the very best rookie faculty members.

Dean Magee: I think that's always the objective. To hire the best young minds coming into the field and to provide them with an environment in which they succeed and in which they thrive, and then they want to stay.

Dean Besanko: There are different ways of managing the hiring of faculty. One way is to run things in such a way that you hire three faculty members expecting that only one will get tenure. We don't run things like that; we run things with the expectation - the expectation - that they will all move through their careers, get tenure and be promoted. Now that's not to say that all three of them are guaranteed to get tenure, or that all three do in fact get tenure. But we hire faculty members with the expectation that they will do research of sufficient quality, and have the potential to develop their classroom capabilities, to go through our system and eventually obtain tenure.

We're expecting excellence, knowing that reality may intercede. But this approach is more in line with the collaborative model that's so prevalent here and about which we spoke earlier.

Dean Magee: Faculty here are not competing against each other. It's not the case that as you look around at the other people in your cohort as a junior faculty member that it's a she-or-me or him-or-me situation. When the Personnel Committee meets, we try to establish a proper benchmark for tenure and if a candidate is over the benchmark, then that person clears that hurdle. It's not who has gone the farthest; it's who has satisfied us that they have made a substantive contribution to their field.

Dean Besanko: Not only do we not set up direct competition among faculty members for specific slots, but we also avoid setting up competition among faculty for specific resources. If you need to go and buy a data set, there are resources that allow you to do that. If you need to run an experiment, the resources are there to do that. If you need computing power, the resources are there. So we feel very, very strongly that there should never be a faculty member who cannot do research for lack of support resources.

Dean Magee: That is true, but there are some requests out there that haven't been entirely addressed.

Dean Besanko: We don't want to convey the impression that we have every last resource. We can always use more support to pursue compelling areas of inquiry.

What can you tell us about the connection between teaching and research? How does one function inform the other?

Dean Magee: I find that I get most of my good research ideas from preparation for teaching. As you're getting ready to discuss a topic in class you try to imagine the questions that students might ask. Some of these questions you actually want them to ask, because they serve as an opportunity to discuss some interesting issues or embellishments. Then there is another set of questions that you hope that no one will ask, because you're not sure what the answer is. But those questions give rise to the possibility for research ideas, because if you can't find the answer anywhere, and it's an important question, then that means it's something that you should pursue.

Dean Besanko: I teach a course called Competitive Strategy and Industrial Structure, which is an elective. It's a very popular course with long waiting lists. Every single topic and idea that is taught in that course has been informed by modern research on the economics of competition and industrial organization. That's a course that, without a body of knowledge that's been developed in that field over the last 20 years, much of which was developed at Kellogg, that course could not be taught the way I teach it. There is almost a direct link between the research history and the course content and the way it's taught.

Our MBA students are not trained as PhD-level researchers in these fields. That's one of the things that makes teaching so fun around here. You have to figure out how to go from the idea expressed in a very abstract way, to an idea that's very usable by a student who is going into a career in management consulting or brand management.

You are again blending theory and practice by making the classroom experience relevant to actual workplace challenges.

Dean Magee: When you think about the knowledge capital we have at Kellogg, a lot of it resides in the faculty. They are the most stable representation of that capital. But the students bring in a lot of knowledge capital through their observations and experiences, and they have their own ideas about cause and effect in the marketplace. One of the things I encourage departments and faculty to do is to teach in areas that are synergistic with their research. To have people teaching in an area or topic that doesn't fit in with their research interests seems to me to lose a real opportunity to get deeper and to build on those synergies that exist. There are loads of areas like game theory, auction design, real options or negotiations strategies where what we teach today is directly derived from research that was done here at Kellogg over the last 20 years.

So there's a constant feedback loop where you're generating new material based on previous research?

Dean Besanko: The ideas start up here [gestures near head] as part of academic research, and then they filter down to PhD classes. Then, if the ideas are compelling, they will make it down to the next levels: the MBA classroom and practice. Obviously when looking at the faculty research up at the top of that chain we're looking for the ideas that will prove to have the most impact or that promise to have durability.

What aspects of the research in your respective fields excites you most? Can you offer a glimpse into the future of your disciplines to say what developments might be on the horizon in the next several years?

Dean Magee: We've asked the departments to think about these questions as part of our introduction to our roles in the dean's office. Talking about my own field, accounting, what's happened is that we've begun to look at behavior issues, at the ways in which people misprocess information. That's a very difficult area to do good research in, because what it means is that the potential for people's misinterpretation can pull prices away from where they should be. But there are also market forces that pull those prices back to where they should be. It's easy to construct conceptual models where prices go off in a silly direction. It's easy to construct models in which they never go off in a silly direction. It's very difficult to construct models in which prices go off, but then there are forces that pull them back to where they should be, where the dynamics suggest a constant approximation and movement around where prices should be. It seems to me that accounting, specifically the way that information is presented and when and where that information is presented, will have a lot to say about how those processes work. That's an area in which there are a few people beginning to work. That would be the place I would put bets as a researcher for discovering the things that will be important 10 years from now.

Dean Besanko: A couple areas seem to me potentially very interesting. One spans both microeconomics and strategy. That's what I would characterize as trying to understand the microstructure of markets. What I mean by that is you take a market for some particular good - automobiles or healthcare or whatever it might be. Typically these markets consist of many complicated consumer segments. For decision making in marketing and strategy in terms of pricing or advertising, you would really like to know the nature of that microstructure. What is the nature of the collection of segments in that area? There are people in economics and in marketing, some of whom are at Kellogg, who work on methodologies to estimate the behavior of demand in light of this interesting microstructure that typically obtains. That area is eventually going to be very important to businesses because it will help them understand the microstructure of a market on the basis of limited data which should enable them to make reliable inferences about the market.

Kellogg faculty in the economics area interested in this research include: David Dranove, Mark Israel, Mark Satterthwaite, Shane Greenstein, Mike Mazzeo.

Another potentially interesting area that could prove to have impact is what I'd call industry dynamics, which tries to construct models of how industries evolve over time. The problem with these models is that they are dynamic and can be very complicated to solve. You can't solve them using pencil and paper; you have to use computers. As access to computing power has developed over the last several years, researchers have been able to develop better and better models.

There may well be other areas of research that will fall into this category too. We're looking at it simply from the perspectives of our own disciplines. The nature of this kind of research is such that you really don't know what's around the bend. It's a big conversation. We don't know all the parts of that big conversation that will filter down and have that durable impact.

It sounds as if there's no lack between how theory and practice may evolve in fascinating ways over time. One thing we know is Kellogg faculty will continue to work at the forefront of this research.
©2001 Kellogg School of Management, Northwestern University